RFE/RL NEWSLINE Vol 2, No. 229, Part I, 30 November 1998

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RFE/RL NEWSLINE Vol 2, No. 229, Part I, 30 November 1998
A daily report of developments in Eastern and
Southeastern Europe, Russia, the Caucasus and Central
Asia prepared by the staff of Radio Free Europe/Radio
Liberty.
This is Part I, a compilation of news concerning Russia,
Transcaucasia and Central Asia. Part II covers Central,
Eastern, and Southeastern Europe and is distributed
simultaneously as a second document. Back issues of
RFE/RL NewsLine and the OMRI Daily Digest are online at
RFE/RL's Web site: http://www.rferl.org/newsline
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Headlines, Part I
* NEW CENTER-RIGHT BLOC FORMED
* GOVERNMENT PROPOSES CUTTING VAT
* ARMENIA, KARABAKH ACCEPT OSCE PLAN, BUT BAKU REJECTS
IT
End Note: UKRAINE'S LACK OF DIRECTION JEOPARDIZES REFORM
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RUSSIA
NEW CENTER-RIGHT BLOC FORMED... A new center-right
alliance has formed in the wake of the murder of Duma
deputy Galina Starovoitova. The bloc includes Democratic
Choice leader Yegor Gaidar, former First Deputy Prime
Ministers Boris Nemtsov and Anatolii Chubais, former
Prime Minister Sergei Kirienko, Saratov Governor Dmitrii
Ayatskov, and deputy head of the presidential
administration Oleg Sysuev, according to a statement
circulated to the press on 27 November. Gaidar told
reporters that a founding conference will be held
sometime between 10 and 15 December. JAC
...DESPITE A MISTAKE AND A FEW OMISSIONS... Despite the
inclusion of his name on the statement, Ayatskov denied
he was taking part or that Chubais or Kirienko had even
discussed the idea with him. He told Interfax on 27
November that he remains a member of Our Home is Russia
(NDR) and is not going to leave it to join any other
party. Missing from the list of participants in the new
alliance were the names of NDR leaders Aleksandr Shokhin
and Viktor Chernomyrdin. "Nezavisimaya gazeta" reported
on 28 November that Chernomyrdin was not invited to
participate, while "Segodnya" reported two days earlier
that Shokhin believes the "NDR should play 'first
fiddle' in the new organization." JAC
...WHILE YABLOKO, DEMOCRATIC RUSSIA OPT OUT. Yabloko
leader Grigorii Yavlinskii labeled plans to form a
center-right bloc an "empty and useless idea." He told
reporters on 29 November that Yabloko will not unite
with either Gaidar or Chubais," who, he said, pursued
policies that compromised the idea of market reform when
they were in government. Meanwhile, Democratic Russia
elected a new leader on 28 November. Georgii Khatsenkov,
chairman of the board of directors of the Pressa-1
Publishing House, was a founding member of the movement.
Khatsenkov ruled out an alliance with Gaidar, Chubais,
or Kirienko, calling them "unviable." JAC
GOVERNMENT PROPOSES CUTTING VAT. Over objections from
the Finance Ministry and IMF, the cabinet of Yevgenii
Primakov approved on 27 November a package of tax
measures including a new proposal to lower value-added
tax from 20 percent to 14 percent and then to 10 percent
by 2000. Federal Tax Service chief Georgii Boos said
that even with the reduced VAT rate, the government will
still be able to collect 485 billion rubles ($27
billion) as planned. However, tax experts are skeptical
since the VAT is considered the most collectable tax in
any economy, the "Moscow Times" reported on 28 November.
Dmitrii Vasiliev believes that the proposed income tax
scale is excessively complex and likely to slow the work
of tax inspectors, according to "Segodnya." The
newspaper suggested that the measures will meet with
some resistance in the State Duma, since under the
proposals, towns and villages appear to be inadequately
compensated with new sources of tax revenue. JAC
RUSSIA, IMF TRY FOR LAST-MINUTE BREAKTHROUGH. A group of
Russian economic specialists arrived in Washington, D.C.
on 30 November for a special brainstorming session on
Russia's economic crisis at IMF headquarters. The
delegation, according to ITAR-TASS, includes former
First Deputy Prime Minister Nemtsov and economists who
once worked in government organs, such as Sergei
Aleksashenko, Mikhail Dmitriev, and Andrei Illarionov.
IMF director Michel Camdessus will himself arrive in
Moscow on 1 December, only a few days after Prime
Minister Primakov suggested that Russia "must listen to
what the IMF is saying." Primakov added that he was
irritated by "youngsters [from the IMF] coming here and
telling us what to do, when they have only read a lot of
books and know nothing of the real situation in Russia."
Primakov also warned that without the $8 billion in IMF
loans, Russia "may have to resort to unpopular
measures," such as an "uncontrolled emission." JAC
KIRIENKO FORMS OWN PARTY. Former Prime Minister Sergei
Kirienko is forming his own political movement.
According to Interfax, Kirienko plans to have his
organization registered in time for the Duma elections
in December 1999. In an interview with "Kommersant-
Daily" on 28 November, Kirienko made only noncommittal
responses to questions about the new rightist bloc,
saying only "we will support anybody who will support
the Russian economy. JAC
TATARSTAN CREDIT RATING TAKES A HIT. Standard & Poor's
on 26 November lowered the credit rating of the Republic
of Tatarstan in response to the republic's turning down
a $100 million loan from ING Barrings to restructure its
internal debt obligations, "Kommersant-Daily" reported
on 27 November. The republic fell into financial
difficulty with the collapse of the market in short-term
treasury bonds and the fall of oil prices. The oil
company Tatneft is the main provider of hard currency to
local government coffers. JAC
GERASHCHENKO TO HEAD NEW BANKING AGENCY. Central Bank
Chairman Viktor Gerashchenko will head the new Agency
for Restructuring Lending Institutions "during its
formative stage," Deputy Prime Minister Gennadii Kulik
told reporters on 27 November. Kulik said that the
Central Bank should maintain one or two banks in every
region for servicing local budgets and financing local
industries. According to "Kommersant-Daily" on 28
November, Gerashchenko won out over the leading
contender, Ashot Egiazaryan, who headed the Moscow
National Bank and worked at Oneximbank and Diamant and
was close to First Deputy Prime Minister Yurii
Maslyukov. The Central Bank opposed Egiazaryan's
candidacy in part because the bank he headed was
stripped of its license long before the recent economic
crisis. JAC
NEW HEAD OF ROSVOORUZHENIE APPOINTED. As widely
anticipated, Yevgenii Ananev was fired on 27 November as
head of the arms export company Rosvooruzhenie, Interfax
reported (see "RFE/RL Newsline," 18 November 1998).
Russian Security Council Deputy Secretary Grigorii
Rapota was appointed to replace Ananev. Rapota, who is
54, served as deputy director of Russia's Foreign
Intelligence Service. Security Council spokesman Yurii
Kobaladze characterized Rapota as "highly competent,
experienced, charming, and easy-going," adding that he
has "a good knowledge of everything to do with the arms
trade." Rapota denied that he would implement a radical
personnel reshuffle. LF
ANTI-CRIME MEASURES APPROVED. The Primakov government
approved a package of anti-crime measures on 27
November. The measures include stripping legislators of
immunity from criminal prosecution, requiring candidates
for political office to disclose more information,
increasing sentences for gun-trafficking, and imposing
tighter controls on private security firms. Prime
Minister Primakov characterized the measures as a
response to the recent assassination of Duma deputy
Galina Starovoitova. He also suggested that the
government "may be talking about the physical
elimination of those who raise their hands against
society, the public, and children." Primakov said that
this package of draft laws was only the first intended
to combat crime, Interfax reported on 27 November.
"Izvestiya" argued that some of the laws may have the
undesired effect of purging honest political candidates
from running, since many candidates may have served time
in prison for violating political articles of the
Soviet-era penal code. JAC
GOVERNMENT PROMOTES MOTHERHOOD. Seven out of 10
pregnancies in Russia end in abortion, while 70 percent
of Russian women suffer from health problems after their
abortions, according to Russian Health Ministry
statistics, Interfax reported. The Russian government
used the occasion of the country's first official
Mother's Day on 29 November to announce that it wants to
achieve a 10 percent drop in the abortion rate by 2000.
The number of abortions performed in 1997--2.5 million--
represents a decline of almost one-quarter since 1992.
Deputy Prime Ministry Valentina Matviyenko told
reporters that the government is seriously concerned
that in recent years the status of motherhood has
diminshed and the number of women who want children has
decreased. JAC
DIPLOMATIC FEATHERS RUFFLED OVER GUARD REMOVAL. A
diplomatic row is flaring up between the U.S. and Russia
over the removal of a 24-hour security guard from the
residence of Russian ambassador to the U.S. Yulii
Vorontsov, "Kommersant-Daily" reported on 27 November.
According to the newspaper, the guard post was removed
"without warning" to save budget resources. A Russian
diplomatic source told the newspaper that "it is
entirely possible that there is a lack of coordination
between Washington, D.C. city officials and the State
Department." The source added that if the guard is not
reinstated, it will show that "the Americans want to
unofficially lower the status of our diplomatic
mission." JAC
RADUEV AGAIN DEFIES CHECHEN AUTHORITIES. Maverick field
commander Salman Raduev inspected his General Dudaev
army in Grozny on 26 November, Interfax reported. Raduev
later told journalists that he will not comply with a
ruling by Chechnya's Supreme Shariah Court that he
undergo a medical examination. Earlier this month, the
court sentenced Raduev to four years' imprisonment for
an alleged coup attempt but then indicated that it may
rescind that sentence if provided with evidence of
Raduev's poor health. Speaking on his private YTV
channel on 26 November, Raduev claimed that Chechen
President Aslan Maskhadov embezzled profits from the
sale of Chechnya's oil. Raduev proposed conducting a
census of the Chechen population and sharing the
republic's oil wealth among its citizens. LF
TRANSCAUCASUS AND CENTRAL ASIA
ARMENIA, KARABAKH ACCEPT OSCE PLAN, BUT BAKU REJECTS IT.
The foreign ministers of Armenia and the unrecognized
Nagorno-Karabakh Republic said on 26 November in Yerevan
that they have officially accepted the latest OSCE Minsk
Group's Karabakh peace proposals as a basis for further
talks, despite unspecified reservations, RFE/RL's
Yerevan bureau reported. Karabakh Foreign Minister Naira
Melkumian said that the guarantees envisaged for
Karabakh's future security and economic development need
further clarification. She also noted that Stepanakert
will not make any further concessions to Azerbaijan. The
previous day, Azerbaijani President Heidar Aliev had
told visiting OSCE chairman-in-office Bronislaw Geremek
that Azerbaijan "will never accept" the proposal that
Azerbaijan and Karabakh form a common state. Aliev
complained that the new peace plan puts Azerbaijan "in a
difficult position" ahead of the 2 December Oslo meeting
of the OSCE foreign ministers. LF
RUSSIA WILL CONTINUE SUPPLYING ARMENIA WITH NUCLEAR
FUEL. Atomic Energy Minister Yevgenii Adamov told
journalists in Moscow on 25 November that Russia will
continue supplying nuclear fuel for Armenia's Medzamor
nuclear power plant "out of political necessity,"
despite that country's debt of 180 million rubles ($10
million) for earlier deliveries, AP and ITAR-TASS
reported. Russian First Deputy Prime Minister Vadim
Gustov said the following day that an agreement on the
supply of fuel elements will be signed within days,
according to Interfax. Armenian Prime Minister Armen
Darpinian said in Moscow on 26 November that he reached
agreement during talks with Gustov and Russian Prime
Minister Yevgenii Primakov on the release of $7-11
million in earthquake relief funds frozen in Armenia's
former Soviet Vneshekonombank, Interfax reported. LF
ARMENIA DROPS OBJECTIONS TO OSCE SUMMIT IN TURKEY.
Armenian Foreign Minister Vartan Oskanian told
journalists in Yerevan on 26 November that the Armenian
leadership has withdrawn its objections to the choice of
Istanbul as the venue for the next OSCE summit, due in
2000 or 2001, RFE/RL's Yerevan bureau reported. The
Armenian leadership had argued earlier that Turkey is
not a suitable venue for the summit in the light of its
poor human rights record and its refusal to open its
frontier or establish diplomatic relations with Armenia.
Oskanian said the Armenian decision was motivated by the
desire to promote regional cooperation. On 27 November,
ITAR-TASS reported that the previous week Turkish border
guards had shot dead an Armenian citizen who tried to
cross the Armenian-Turkish frontier in the mistaken
belief that he was a Kurdish suicide bomber. LF
AZERBAIJANI OPPOSITIONIST SENTENCED FOR ALLEGED COUP
PLAN. A leading member of the Azerbaijani Popular Front
Party, Fuad Gakhramanly, was sentenced to 18 months in
prison on 27 November for authoring an article allegedly
outlining ways to overthrow President Aliev, Reuters and
Turan reported. Gakhramanly was arrested in June after
the unpublished article was confiscated during a search
of the premises of the opposition newspaper "Chag" (see
"RFE/RL Newsline," 30 June and 19 November 1998). LF
AZERBAIJANI JOURNALISTS' PROTEST FORCIBLY DISPERSED.
Police broke up a picket in front of the presidential
administration building in Baku on 25 November. The
action had been organized by editors of opposition
publications protesting the recent crackdown on the
independent media, Turan and Interfax reported. Meeting
the following day with some 20 editors who had launched
a hunger strike earlier this month to protest libel
cases brought by leading officials against independent
newspapers, OSCE chairman-in-office Geremek pleaded with
them to end their action, which, he said, "has
demonstrated the dramatic state of freedom of speech in
Azerbaijan." Some editors stopped their hunger strike
later that day on medical advice. Meanwhile, 13 senior
officials and members of President Aliev's family have
opened separate libel cases against the newspaper
"Azadlyg," demanding a total of $462,000 in damages. The
newspaper claimed they had acquired real estate abroad,
Turan reported on 25 November. LF
UN EXPRESSES CONCERN OVER ABKHAZIA. The UN Security
Council issued a statement on 25 November expressing
concern at the possibility of renewed fighting in
Abkhazia and calling for the planned meeting between
Georgian President Eduard Shevardnadze and Abkhaz leader
Vladislav Ardzinba to take place as soon as possible, AP
and dpa reported. Shevardnadze told journalists on 26
November that the reasons for the postponement of that
meeting, originally planned for the first half of
November, was that agreement had not been reached with
the Abkhaz leadership on security guarantees for ethnic
Georgians returning to Abkhazia. Shevardnadze also
expressed surprise at a statement earlier that day by
Tamaz Nadareishvili, chairman of the Abkhaz parliament
in exile. Nadareishvili claimed to have information that
the Abkhaz were planning to shoot down Shevardnadze's
airplane if he flew to Sukhumi to meet with Ardzinba,
according to Caucasus Press. LF
BULGARIAN PRESIDENT IN TBILISI. During his visit to
Tbilisi on 26-27 November, Petar Stoyanov met with his
Georgian counterpart, Shevardnadze, to discuss
implementation of the TRACECA project, including the
projected ferry link from Poti to Varna, and the
prospects for exporting Caspian oil via Bulgaria. On 27
November, Stoyanov visited both Poti and the oil
terminal at Supsa. Georgian and Bulgarian officials
signed a number of bilateral agreements on defense and
frontier cooperation, combating drugs and crime, and
avoiding double taxation. LF
TAJIK REBELS IMPLICATE UZBEKISTAN. At a 27 November
press conference in Dushanbe, 16 rebels who were
captured during fighting in Tajikistan's northern
Leninabad Oblast earlier this month claimed they were
trained in Uzbekistan and Afghanistan, Russian agencies
reported. The rebels said they crossed into Afghanistan
via the Uzbek border city of Termez and were trained in
Uzbekistan by members of former Tajik Army Colonel
Mahmud Khudaberdiyev's troops and "military specialists
of Uzbekistan's special forces." They later received
additional training in Uzbekistan's Jizzak Oblast before
entering northern Tajikistan. Uzbek President Islam
Karimov on 30 November denied that Uzbekistan has any
links to the rebels. According to Interfax on 27
November, 114 government servicemen died and 431 were
wounded during the fighting in Leninabad Oblast, while
220 rebels were killed and 215 wounded. BP
UZBEK FOREIGN MINISTER IN IRAN, PAKISTAN. Abdulaziz
Kamilov was in Iran and Pakistan from 24-27 November to
whip up support for a conference on Afghanistan in
Tashkent, ITAR-TASS reported. Meeting with his Iranian
counterpart, Kamal Kharrazi, he extended an invitation
to both Kharrazi and Iranian President Mohammad Khatami
to visit Uzbekistan. IRNA reported on 24 November that
while Kharrazi described Uzbekistan as a country that
has "close ties with Iran," this does not mean the two
countries hold identical views on issues. On 27
November, Kamilov met with Pakastani Prime Minister
Nawaz Sharif and handed over a letter from Uzbek
President Islam Karimov. Kamilov also met with Taliban
representative Wakil Ahmad to discuss Taliban
participation in the Tashkent conference. Ahmad,
however, said his movement will participate only if it
is invited as the legal government of Afghanistan. BP
KAZAKHSTAN, UES AGREE ON DEBT PAYMENT. Kazakhstan on 28
November announced it will pay off its $229 million debt
to Russia's Unified Energy Systems (UES) by turning over
the Ekibastuz Power Plant No. 2, the Ekibastuz-Omsk
power line, and the Severny coal pit to the Russian
company, Russian agencies reported. UES board chairman
Anatolii Chubais, who was in northern Kazakhstan for
discussions with Kazakh officials, called the decision a
"breakthrough" and said it paved the way for the
creation of powerful joint industrial conglomerate that
would export electricity from Kazakhstan to Russia. BP
CANDIDATES FOR KAZAKH PRESIDENTIAL ELECTIONS ANNOUNCED.
The Central Elections Committee announced on 30
November, the last day of registration for the January
presidential elections, that incumbent President
Nursultan Nazarbayev, chairman of the Customs Committee
Gany Kasymov, parliamentary deputy Engels Gabbasov, and
Communist Party chairman Serikbolsyn Abdildin have all
registered to compete, RFE/RL correspondents in Astana
reported. Abdildin had said at a 26 November press
conference he has collected only 115,000 of the 170,000
signatures required to register and that he doubted he
would be able to pay the registration fee of $30,000,
which is 1,000 times the minimum average wage in
Kazakhstan. Also on 26 November, the U.S. State
Department criticized the ruling of the Kazakh Supreme
Court two days earlier upholding a lower court's
decision that in effect barred former Prime Minister
Akezhan Kazhegeldin from running in the elections. BP
KYRGYZ OPPOSITION LEADER RELEASED EARLY FROM JAIL. The
chairman of the opposition party Erkin Kyrgyzstan,
Topchubek Turgunaliev, was released from prison on 24
November, RFE/RL correspondents in Bishkek reported.
Turgunaliev was sent to prison for four years on charges
of abuse of power in February 1997. Those charges
stemmed from the period when Turgunaliev was rector at
the Bishkek University of Humanities in 1994. BP
RUSSIAN STATE DUMA SPEAKER IN TURKMENISTAN. Gennadii
Seleznev said at a press briefing in Ashgabat on 25
November that there must be a resolution to the dispute
between Russia's Gazprom and Turkmenistan, Interfax and
ITAR-TASS reported. Gazprom and Turkmenistan have again
failed to reach agreement on the price of Turkmen
natural gas supplies delivered to Europe via the Russian
company's pipelines. He also criticized Turkmenistan's
delays in facilitating the granting of Russian
citizenship to those who wish to have it. The two
countries have an agreement on dual citizenship. BP
END NOTE
UKRAINE'S LACK OF DIRECTION JEOPARDIZES REFORM
By Christopher Walker
Seven years into its post-Soviet experience as an independent
state, Ukraine has distinguished itself as much by what it has avoided as
by what it has accomplished. On the one hand, the country has managed to
escape the deep ethnic divisions many predicted and, for the time being at
least, has sidestepped the near total economic and social collapse Russia
has undergone. But at the same time, Ukraine has also avoided many of the
critical reforms necessary to pave the way for long-term prosperity.
Thus, Ukraine now finds itself at a crossroads, uncertain whether
the belated implementation of strict reforms would generate Polish-style
prosperity or Russian-style destabilization. The reluctance to proceed with
an ambitious program of painful measures is in many ways understandable.
Average Ukrainians have suffered enormous hardships since 1991. If asked to
endure even more in a bid to achieve the promised, albeit theoretical
prosperity, many Ukrainians would answer "no."
A kind of symbiotic paralysis has developed between Ukraine's
political decision-makers and the country as a whole. Each knows action
must be taken, but neither is able to identify the force that could act as
the catalyst for change.
Recognizing this, the Communists, in cooperation with leftist
forces in the parliament, point to Russia's difficult experience with
Western-style reform to bolster their argument for taking a different
course at home. The battle lines are visible in the current dispute over
the state budget, in which members of the opposition are heavily attacking
the government's proposed budget as endangering Ukraine's social safety
net.
While Russia's difficulties loom large on Ukraine's eastern border,
a more constructive example is provided by Poland, to the West. Poland's
success did not come easily. The economic recovery, which began in 1992,
was preceded by nearly three years of economic suffering and social
dislocation.
After the fall of communism, Poland was indisputably in a better
position than Ukraine to make the difficult post-Soviet transition, but
despite the initial hardships, Poland has steadfastly stayed the reform
course. It now is enjoying the rewards of its hard-fought efforts. Poland
has achieved rapid private-sector growth, estimated at 10 percent annually
from 1995 through 1997. Unemployment has been steadily declining and is now
under 10 percent, down from a high of 16 percent in 1994.
Moreover, Poland has attained positive GDP growth annually over the
past six years. Foreign investors have acknowledged Poland's commitment to
economic reform. From 1990 to mid-1997, total foreign investment in Poland
was $16.2 billion. By comparison, foreign investment in Ukraine from
independence in 1991 through the third quarter of 1998 totals $2.6 billion.
Of course, as long as the Ukrainian authorities dither over reform, foreign
investors will be reluctant to commit significant resources to the
Ukrainian market.
Ukraine should also consider the implications of Poland's growing
prosperity and its entry into the Western sphere of influence. To both
countries' credit, they have worked assiduously to forge a balanced and
constructive relationship. However, the EU is asking Poland to take firmer
steps on a number issues related to Poland's eastern neighbors. For
example, Warsaw is facing considerable pressure from Brussels to tighten
border restrictions with Ukraine, but for the time being it has refused to
impose visa requirements on Ukrainians.
At home, Ukraine is beset by a host of other problems, including
pension and wage arrears, rampant organized crime, and widespread official
corruption. A burgeoning shadow economy has evolved in response to the
dysfunction of the official market. The shadow economy, along with the many
individuals and businesses that flout the law, accounts for a huge loss in
desperately needed tax revenues. In fact, the authorities' frustration with
widespread tax evasion payment was revealed last summer when Prime Minister
Valeriy Pustovoytenko ordered 1,500 business executives to a tent camp
outside Kyiv until they paid delinquent taxes.
Other evidence of Ukraine's economic weakness is observable in the
vast number of Ukrainians who travel abroad in search of employment. Large
numbers of Ukrainians work as manual laborers in the Czech Republic,
Poland, Germany, and other countries for periods of several weeks or
months. Many of these jobs are run by Ukrainian gangs or criminal
syndicates that claim to offer safe transport, employment documents, and a
large amount of money by Ukrainian standards. After completing their terms
of employment, many are disappointed to learn that they will receive only a
bus ticket back to Ukraine, if that.
By venturing westward to countries that already belong to the EU or
are within striking distance of joining that organization, these Ukrainian
workers are implicitly acknowledging the direction their own country should
take.
The author is manager of programs at the European Journalism Network.
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